U.S. Supreme Court rules 6-3 to save Obamacare tax subsidies

The U.S. Supreme Court upheld a core component of President Barack Obama’s health-care law, backing tax credits used by millions of Americans to buy insurance and preserving the landmark measure that will define his legacy.

The 6-3 ruling eliminates the most potent legal challenge to a law designed to cover at least 30 million uninsured people. The decision averts a collapse in state insurance markets and lets Americans keep using the federal subsidies designed to make policies affordable.

Chief Justice John Roberts and Justice Anthony Kennedy joined the court’s four Democratic appointees in the majority. They said the 2010 Affordable Care Act allows tax credits in all 50 states, not just the 16 that have authorized their own online insurance exchanges.

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Roberts wrote. “If at all possible, we must interpret the act in a way that is consistent with the former, and avoids the latter.”

The ruling is the high court’s second in three years to preserve Obamacare in the face of Republican-backed legal attacks. Republican opponents now must look to winning the White House in the 2016 election if they hope to roll back the law.

Hospitals rally

Hospitals led a rally among health-care companies after the ruling. HCA Holdings Inc., the largest for-profit hospital chain, gained 8.6 per cent to $90.57 at 10:28 a.m. in New York. Tenet Healthcare Corp. jumped 9.1 per cent and Community Health Systems Inc. added 7.5 per cent.

Stock gains at insurers were smaller, in part because subsidized customers make up a small proportion of the total at the biggest firms. UnitedHealth Group Inc., the largest U.S. health insurer, rose 2 per cent to $121.55.

The companies will benefit as more people purchase coverage in the future.

A ruling against the administration might have forced more than 6 million people to drop Obamacare policies because of tripling and even quadrupling premiums.

The legal fight centered on a four-word phrase in a law that covers more than 900 pages. The measure says people qualify for tax credits when they buy insurance on an exchange “established by the state.”

The group challenging the law, four Virginia residents represented by Washington attorney Michael Carvin, said that phrase meant subsidies weren’t available in at least 34 states that never authorized their own exchanges. Residents of those states instead use the federal healthcare.gov system.

Three dissenters

Justices Antonin Scalia, Samuel Alito and Clarence Thomas dissented.

“We should start calling this law ‘SCOTUScare,’” Scalia wrote. The ruling sends the message that “the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites,” he said.

In a divisive clash three years ago, the justices upheld one of the law’s core provisions, its requirement that people either acquire insurance or pay a penalty. Roberts joined the court’s four Democratic appointees in the majority.

At the same time the ruling gave states more freedom to opt out of the law’s expansion of the Medicaid program for the poor. Twenty-two states have refused to expand Medicaid, reducing the number of people eligible for subsidized insurance by almost 4 million, according to the Kaiser Family Foundation.